Texas Real Estate Markets

Texas is two stories at once: the country's strongest growth engine and its highest-stakes property-tax environment. Price-to-income 2.95, cap rate proxy 5.1%, median home $267,600, across 29,640,343 residents and 25 metros. No state income tax and +0.26% net migration are the structural tailwinds. 1.63% effective property tax is the line that decides whether any specific deal clears.

The FHFA HPI is up 38.8% over five years and 0.6% last year — the post-boom cool-down is real in year-over-year terms. Builders pulled 204,626 permits TTM at 6.9 per 1,000 residents — the country's highest absolute pace. Unemployment sits at 4.5% with median household income at $78,036.

The 25 metros sort into four tiers. Dallas-Fort Worth-Arlington ($330K median, 4.56% cap, 7.7M pop) is the institutional anchor — corporate relocations, finance, logistics. Houston-The Woodlands-Sugar Land ($275K, 4.46% cap, 7.1M) is the energy + port diversification play. San Antonio-New Braunfels ($259K, 4.30% cap) adds military + medical; Austin-Round Rock-Georgetown ($435K, 3.32% cap) is the tight tech-appreciation play. The cash-flow tier is the border and Permian Basin: McAllen-Edinburg-Mission ($124K, 6.67% cap), Brownsville-Harlingen ($120K, 6.81% cap), Odessa ($191K, 6.53% cap), El Paso ($167K, 5.56% cap). Mid-tier: Corpus Christi, Killeen-Temple, Waco, Lubbock, Tyler — 4.5-5.8% cap in the $170K-$230K range.

Against Florida (the other no-income-tax Sun Belt peer), Texas has lower entry prices, higher permit velocity, and similar migration. Florida wins on property tax (lower effective rate) and HPI trajectory; Texas wins on labor diversification and border cash-flow math. Against Georgia and North Carolina, Texas wins on scale, trails on property tax. Against the Midwest, Texas trades cohort-leading growth for 1.63% property tax instead of sub-1%.

Operating environment is landlord-friendly but expensive on the carrying side. 21-day eviction timeline, no rent control, no deposit cap. 62.8% homeownership, 9.4% vacancy. Insurance averages $2,005/yr — high, driven by Gulf Coast hurricane and central-plains hail exposure. 0.00% state income tax on rental income.

So what does an investor do?

• Cash flow: Border and Permian metros. McAllen and Brownsville clear 6.5%+ cap proxies at sub-$125K — nowhere else in the country hits that ratio on a metro with genuine population depth. Odessa rides the Permian Basin energy cycle. Underwrite property tax as a first-line expense at 1.63% — it's the single biggest drag on an otherwise-strong Texas deal.
• Appreciation: Austin is the tight-math appreciation play; DFW, Houston, and San Antonio are the scale growth bets. HPI cooled hard year-over-year, so time entry carefully — post-boom digestion looks different from an accelerating market.
• Out-of-state: Texas is the country's most metro-specific state. The 25 metros cover every strategy (luxury appreciation in Austin, border cash-flow in McAllen, energy cycle in Odessa, scale diversification in DFW/Houston) — state averages hide that completely. Pick the metro first; let the state-level narrative be context, not a buy signal.